SHRISTI- STRATEGY CHOICES AND IMPACTS: January 2014

Managing change at Faslane: the Report

1. Introduction:

Her Majesty’s Naval Base Clyde – commonly known throughout the Navy as Faslane – is the Royal Navy’s main presence in Scotland. It is home to the core of the Submarine Service, including the nation’s nuclear deterrent, and the new generation of hunter-killer submarines. It is the ministry of defence (MOD) installation, but managed by private sector Babcock Marine, part of Babcock International. By 2000 MOD decided to reduce the cost and improve the operational effectiveness, in 2002 they signed a contract with Babcock for 5 years to reduce the cost by at least £76 million, and it was able to achieve the target in the allotted time.

This report has been prepared as per the academic requirements for the Module: Strategy Choices and Impact, there is a brief discussion and analysis of various aspects of strategic change that occurred in the Faslane. In this report Balogun and Hope Hailey’s Change Kaleidoscope and Lewin’s Forcefield analysis was conducted in order to analyse the internal feature of Faslane also Johnson’s Cultural web and McKinsey’s 7S model. In other to analyze the internal features of Faslane some analytical tools were used to measure the changesuch as Mc Kinsey‘s 7S Model and Johnson’s Cultural Web; and to recognize the strategic leadership style was compared with Lynch model, and at the end the final conclusion is made to summarize the report.

2. Analysis:

The MOD decided to agree on the partnering agreement with the Babcock international so the marine which was managed by the MOD earlier was now managed by Babcock international, this transissation was very important for Babcock international because it could improve its level of performance by reducing the cost of operation.

2.1. Strategic Change:

If I have to analyse the strategic change that the faslane has applied then I would say it has definitely applied the Change of Kaleidoscope to examine the process of change in Faslane. The process of change has been the revolutionary one because the main purpose was to revolutionize the way of thinking of their workforce. The new management team Babcock international was handed over the responsibility of reducing the operating cost of £76 million in the time period of five years which was definitely not an easy nut to crack. So the idea of transfer of the skill of the staff was applied as the MOD provided them with people who knew how to run a naval base. It was only the matter of managing the skills of the staffs in a better way. The transfer was amongst the staffs who had already faced the change before as well so there was less time consumption in the settlement of the staffs and for them to adapt to the change that was made initially, from level zero which made it easier for the implementation. Not only the staff were changed the management structure as a whole was changed keeping in mind the risk factor as well after all it was a nuclear naval base. During the revolutionize framework of change, the new management team emphasize the importance of inward looking. In the meantime the Babcock international was mainly focused on the increasing the efficiency of the staffs without its affect on the quality of service that had been provided, and it was possible by bringing in skilled workers in the company to work for Faslane. The management came up with an emergent strategy of letting the employees make their own team, prepare work plans accordingly, work towards fulfilling the goals basically it made it more flexible to work in the self created working environment, the management team not only made the working environment flexible but was reduced and diversified as well, but work wise, the staffs were not really adapting to the changes made due to lack of experience.

The concept was a positive one because the budget was fixed, the people were highly skilled by which they could overcome the change. On the other hand, the management had just limited time and had to give the result of £76 million within the same period, and the management team was definitely ready for the challenge as it had the skills and also had a good track record in the past and was definitely capable for the management. Whereas the staffs were not really in the situation to accept the change because they were not really used to it as it had never happened before and they were in dilemma if the change would benefit them or not.

Figure 1.1 Balogun and Hope Hailey’s Change Kaleidoscope of Faslane.

Kurt Lewin developed the ‘’Five field analysis’’ in 1951, and it is used in identifying and analyzing the positive factors of a situation that helps identifying the negative factors that hinder an entity in achieving its objectives. In figure 1.1 I have used the force field analysis to analyze the factors that are for and against the change which can be seen in the table below, and for other factors as well, the Ministry Of Defence (MOD) of was in a desperate need of saving in other words reducing the cost as well as improve the service as well. So the change had to start from somewhere so the top level decided in providing quality service as expected by the customers, there was also the transfer of the employees within the organization as the vision for sustainable development. It also have a brief analysis of other resisting factors as well such as the impact of the change occurred and not being sure if it was beneficial for all the individuals individually. The people working in Faslane was used to the old of working and they were feeling difficult in working in the new situation or the changed environment, but that was more helpful for them which brought them out from the monotonous way of working. Next problem was the bureaucracy that was existing in the organization. All the above mentioned factors shows that it was very important for Faslane to go through certain change an work differently in order to increase the efficiency and also save money. The change can be regarded as a revolutionary one as it was both strategic as well as a cultural one.

FORCE FIELD ANALYSIS

(Table 1.1) Lewin’s Force field Analysis of Faslane

Positive Forces	Negative Forces
§ It requires cost saving	§ It fears from the impact of the change.
§ Improvement in the operational efficiency	§ Old management structure
§ New ways of working	§ Traditional way of working
§ Customer expectation	§ Focused on cost reduction
§ Diversity growth	§ Political intervention
§ Unsustainable cost	§ Slow to change

2.2 Internal Features of Faslane:

The partnership agreement of MOD with Babcock, did manage to grab the employees attention and made them believe the change was good and in return the employees gave them their commitment and loyalty for the succession and welfare of the organization. The change gives a brief idea about the human assets being the most important asset in the organization. Babcock also changed the management structure of the company and helped in eradicating bureaucracy. There was no new plans formulated to change the way of working, they were following the same way of working, the same way of decision making, no creativity, just following the traditional way of working. They had the misconception that change was not at all necessary and change would ruin everything. So they were saying NO to change.

Then, entered Babcock international and took over the management from MOD for 5 years time with a hope to cut down the cost and give back some profit to the organization. The first step it took was to change the structure of the organization, brought in experienced staffs, made the staffs familiar to the change and helped them adapt to the change, active participation of employees in the work decision making all these successful implementation helped the organization grow and helped in making some profit for the organization. Now, people were considered the most important assets in the company rather than the infrastructure. Now the organization was more diversified with more experienced and qualified workforce with better management and working with unique set of skills. The management also reduced the review day from 56 days too only 6 Days that was a huge cut of 50 days and we can imagine the cost reduction as well, which was definitely helping in the five year target achievement of Babcock. The staffs were given full freedom to make their own work plans and also implement them which was making working more fun and people were coming up with more creativity. But it also had a drawback because of the decreased layers of management, which resulted in the significant cut off of jobs that might have put pressure on the employees to perform or they might be kicked out of the company if they performed poorly.

In conclusion, Faslane completely changed the organizational structure of the company and made people realise that change is necessary and change is good. And it was the change that helped in achieving the organizational goal within the given time limit of 5 years.

Figure 1.2 Johnson's Cultural Web.

Johnson’s Cultural Web (2002 to 2010).jpg

Figure 1.3 Johnson's Cultural web (2002-2010)

Table 1.2 McKinsey’s Seven S Model

SEVEN S		STRENGTH	WEAKNESS
HARD ELEMENTS
STRATEGY	Ü Improved performance, good quality services with cost savings.		Ü Quality of service could decrease through cost savings.
STRUCTURE	Ü Formal structure: provides the staffs with flexibility to create their own team and develop own business plans. Ü Roles and responsibilities were clear. Ü Reduction of management layers from 7 to 4.		Ü The hierarchy of the organization can be managed by providing excessive freedom to the staffs and can result in serious problems.
SYSTEM	Ü Changed the traditional mindset of people. Ü Expert team of management.		Ü Problems were arising in handling complaints from customers. Ü Immediate change process.
SOFT ELEMENTS
SKILLS	Ü Workforce at MOD was experienced in operating the Naval Base. Ü Experience of change (most of the staffs).		Ü Workforce from Bobcock Marine were unfamiliar with the operation of Naval Base.
STYLE	Ü Leaders have experience of change process.		Ü Such industries carries a potential for risks associated with change process.
STAFF	Ü More than 2000 staffs from Civil service working with Faslane. Ü More focus on people rather than infrastructure and facilities by the staffs.		Ü Loss of jobs arises after reducing the management layers and this is not a motivating factor for the staffs.
SHARED VALUES	Ü Committed to reduce cost while not damaging the quality of services.		Ü The strategy of the organization can be hampered because Bobcock is a private company which will seek more profits as the time goes.

2.3 Strategic Leadership style at Faslane:

In 2002, came a new managing director of Babcock Marine, it was Craig Lockhart who replaced John Howie, that was when Faslane saw significant change from 2002. The two companies were completely different from each other. Babcock was a private company, with more skilled resources and a goal oriented organization mostly focused in target achievement and achieving the competitive advantage.

Figure 1.4

Below are the elements of successful and effective strategic leadership:

· Developing and communicating the organizations purpose:

This element states the ultimate job of the leader is to make decision on the ultimate purpose of the company or organization itself and after the decision is finalised he has to make sure that it is circulated amongst all the staffs working in the organization. In Faslane also the employees were given full authority to make teams make team plans and work toward the attainment of the perceived goals.

But if we think from the other side, many employees had to lose their jobs because of the reduction of the management structure.

· Sustaining competitive advantage overtime:

This one states that the leader of the organization is responsible for gaining the competitive advantage for the organization or maintaining them for ultimate goal achievement of the company. In the case study it is stated that the company was able to gain almost £100 million in just five years and this was possible because of proper management and goal focused mission and vision. With this capability and ability to bring change in short span of time Faslane is expected to become home base for the entire UK submarine fleet.

On the other hand such competitive advantage may not sustain for a very long time.

· Managing Human resource and organizational division:

This element states that the managers are the ultimate leaders of the company who are responsible for managing, planning, organizing, motivating, training and development of the employees in the organization. That is what Babcock did it cut down the cost of the company by cutting down the jobs and cutting down the review period as well.

On the contrary, it might create wrong impact on the employees of the company because they will be pressurised in working and also fear of losing the job and might not be able to perform.

· Setting Ethical Standards:

If we consider the Lynch model, it states that the leader is responsible for maintaining the standards, setting the rules and goals and monitoring the corporate social Responsibility. In the Faslane case study a contract was made between two parties for five years to minimize the cost of the organization. If the contract was not fulfilled than that would have been ethically incorrect.

· Defining and delivering to stake holders:

The Lynch model also states that the leaders must maintain good relationship with the employees within the organization and with the stakeholders outside the organization. Faslane was able to deliver best quality services after Babcock came into the picture, as it made Faslane meet all its targets and by doing that it was able to satisfy the stakeholders as well.

Conclusion:

After going through the case study and finishing my analysis on Faslane, it is clear that working while following all the strategically rule is not an easy job because after the analysis I have realised that though it may seem like an easy job and task to follow but to come with a successful end result is not an easy job. Faslane being a public company was successfully managed by a private firm, not only managed well but helped in getting perfect results. The end results have been just perfect. Babcock successfully conducted the transformation with the help of skilled employees, proper management, and proper use of resources. Faslane was able to fulfil all the five elements of successful and effective strategic leadership, from good flow of communication, effective strategy, proper leadership etc, after the successful result of Faslane was given the entire UK submarine fleet to handle.